The pending sale of International Gaming Technology’s digital and gaming business and Everi Holdings to funds managed by Apollo Global Management for $6.3 billion was a hot topic during Tuesday’s earnings call.
“We know investors are eager to understand the utilization of the proceeds from the sale of digital and gaming,” IGT CEO Vince Sadusky said during the call. “We completely understand that what we communicated is the $2 billion debt pay down, and that’s the reason, of course, for the pro forma disclosure around the continuing of all the financial metrics. … Just an incredible journey of debt reduction the company’s undertaken very diligently over the past five years or so, in terms of that incremental amount above the $2 billion debt commitment.
“Again, that’s something that we will discuss at or around the closing date. We have some thoughts around the potential utilization, but I think that’s something that we’re not prepared to do at this point.”
For the fourth quarter, IGT reported revenue of $651 million. The company generated adjusted EBITDA of $290 million and an adjusted EBITDA margin of 44.5%.
For the year, IGT posted revenue of $2.5 billion, driven by instant ticket and draw game sales in the United States, Canada and Italy. Adjusted EBITDA was $1.17 billion, and adjusted EBITDA margin was 46.6%. Consolidated cash from operations was $1.03 billion, including $689 million from continuing operations. Consolidated free cash flow reached $659 million, with more than 80% generated by continuing operations.
Sadusky said the pending price increase of Mega Millions tickets from $2 to $5 should result in a positive outcome for IGT. He noted that there is limited experience with price points adjustments for the Mega Millions or the Powerball lotteries, but the “net price point change is positive to very positive.”
“Historically, when Powerball has increased their price or Mega Millions increased their price a long time ago, it certainly had a significant impact on the net sales,” Sadusky said.
“What we modeled out … there will likely be a fewer number of tickets sold, but at a greater price point. There will likely be a temporary adjustment, as it takes some time for the increase to work its way through the system and for individuals to recognize the higher starting point of the jackpots. And hopefully, the math is right and will result in the faster build of jackpots. And as we all know, the higher the advertised jackpot is is where we get a significant increase in velocity in sales. We think that will be a net positive.”
IGT’s bid to renews its contract with the Italian lottery, due on March 17, also will be a focus of the company in 2025.
“We’ve been working internally on our bid for the better part of a year,” Sadusky said. “We’ve done a lot of work on our technology solution. … We’ve demonstrated the ability to continue to grow this very old lottery through excellent product innovation and the constant refinement of our offering to players, the same as we’ve done for about three decades now. … And that is something that we believe is clearly an opportunity for us as we think about the future.”
